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Updated over 1 year ago on . Most recent reply
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Ever consider collecting all rent up front for a discount?
I know that when a new tenant offers to pay upfront its a red flag. However, for an existing (good) tenant anyone ever consider offering a plan where rent can be paid in advance in return for a discount? I am in software sales, and this is a common practice we employ when doing deals. It can be for a 6 month or 1 year period, and have a sliding scale of discounts?
Why I am thinking about this? In my experience I have found even good tenants have life circumstance or unforeseen economic hits come that they are not prepared for. With unemployment at a historical low, inflation remaining sticky and a Fed that is determined to slow down this economy I think it is a foregone conclusion that unemployment will go up substantially, meaning collecting rents can get harder.
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- Real Estate Broker
- Cody, WY
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No.
1. This is a red flag. Many tenants ask to pay an entire year up front to weasel their way into a rental they otherwise wouldn't qualify for. Many Landlords will see the "easy money" and ignore red flags about the tenant. It's also a way for Tenant A to jump ahead in line of other applicants.
2. The money is not truly earned until it's applied to a charge. If you spend all that money in January and the Tenant breaks their lease six months later, you will have to look for a new tenant and then refund any unused portion of the rent that was prepaid by the departing tenant. If you've already spent it, this could be a serious financial burden.
- Nathan Gesner
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